Regional Management Corp. was incorporated in South Carolina on March 25, 1987,
and converted into a Delaware corporation on August 23, 2011. We are a diversified
specialty consumer finance company providing a broad array of loan products
primarily to customers with limited access to consumer credit from banks, thrifts,
credit card companies, and other traditional lenders. We began operations in
1987 with four branches in South Carolina and have expanded our branch network
to 331 locations with approximately 349,300 active accounts primarily across
Alabama, Georgia, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee,
Texas, and Virginia. Most of our loan products are secured and each is structured
on a fixed rate, fixed term basis with fully amortizing equal monthly installment
payments, repayable at any time without penalty. Our loans are sourced through
our multiple channel platform that includes our branches, direct mail campaigns,
independent and franchise automobile dealerships, online credit application
networks, retailers, and our consumer website. We operate an integrated branch
model in which nearly all loans, regardless of origination channel, are serviced
through our branch network, providing us with frequent in-person contact with
our customers, which we believe improves our credit performance and customer
loyalty. Our goal is to consistently and soundly grow our finance receivables
and manage our portfolio risk while providing our customers with attractive
and easy-to-understand loan products that serve their varied financial needs.
We operate in the consumer finance industry serving the large population of
non-prime and underbanked consumers who have limited access to credit from banks,
thrifts, credit card companies, and other traditional lenders. According to
the Federal Deposit Insurance Corporation (“FDIC”), there were approximately
51 million adults living in underbanked households in the United States in 2013,
up from 43 million in 2009. While the number of non-prime consumers in the United
States has grown, the supply of consumer credit to this demographic by traditional
lenders has contracted. Following deregulation of the U.S. banking industry
in the 1980s, many banks and finance companies that traditionally provided small
denomination consumer credit refocused their businesses on larger loans with
lower comparative origination costs and lower charge-off rates.
We believe the large number of potential customers in our target market, combined
with the decline in available consumer credit, provides an attractive market
opportunity for our diversified product offerings – installment lending,
automobile lending, and retail lending.
Installment Lending. Installment lending to non-prime and underbanked consumers
is one of the most highly fragmented sectors of the consumer finance industry.
Providers of installment loans, such as Regional, generally offer loans with
longer terms and lower interest rates than other alternatives available to underbanked
consumers, such as title, payday, and pawn lenders.
Automobile Lending. Automobile finance comprises one of the largest consumer
finance markets in the United States. The automobile loan sector is generally
segmented by the credit characteristics of the borrower. Automobile loans are
typically initiated or arranged through automobile dealers nationwide who rely
on financing to drive their automobile sales.
Retail Lending. The retail industry represents a large consumer market in which
retailers often do not provide their own financing, but instead partner with
large banks and credit card companies that generally limit their lending activities
to prime borrowers. As a result, non-prime customers often do not qualify for
financing from these traditional lenders.
Grow Our Branch Network. We intend to continue growing the loan volume, revenue,
and profitability of our existing branches, opening new branches within our
existing geographic footprint, and expanding our operations into new states.
Establishing local contact with our customers through the expansion of our branch
network is key to our frequent-contact, relationship-driven lending model and
is embodied in our marketing tagline: “Your Hometown Credit Source.”
Existing Branches – We intend to continue increasing same-store revenues
by further building relationships in the communities in which we operate and
capitalizing on opportunities to offer our customers new loan products as their
credit profiles evolve. From 2011 to 2015, we opened or acquired 161 new branches,
and we expect revenues at these branches will grow faster than our overall same-store
revenue growth rate as they mature.
New Branches – We believe there is sufficient demand for consumer finance
services to continue our pattern of new branch openings and branch acquisitions
in the states where we currently operate, allowing us to capitalize on our existing
infrastructure and experience in these markets. We also analyze detailed demographic
and market data to identify favorable locations for new branches. Opening new
branches allows us to generate direct lending in the branches, as well as to
create new origination opportunities by establishing relationships with automobile
dealerships and retailers in the community.
New States – We intend to explore opportunities for growth in several
states outside of our existing geographic footprint that enjoy favorable operating
environments, such as Kentucky, Louisiana, Mississippi, and Missouri. We do
not expect to expand into states with unfavorable operating environments even
if those states are demographically attractive for our business. In 2011, we
opened our first branch in Oklahoma; in 2012, we opened our first branch in
New Mexico; in 2013, we opened our first branch in Georgia; and in 2015, we
opened our first branch in Virginia.
We also believe that the highly fragmented nature of the consumer finance industry
and the evolving competitive, regulatory, and economic environment provide attractive
opportunities for growth through acquisition.
Automobile Loans – We source our automobile loans through a network
of dealers in our geographic footprint. We have hired dedicated marketing personnel
to develop relationships with these dealers and to expand our automobile financing
network. We will also seek to capture a larger percentage of the financing activity
of dealers in our existing network by continuing to improve our relationships
with dealers, maintaining the competitiveness of the products we offer, and
reducing our response time to loan applications.
Retail Loans – Our retail loans are offered through a network of retailers.
We intend to continue to grow our network of retailers by having our dedicated
marketing personnel continue to solicit new retailers, obtain referrals through
relationships with our existing retail partners, and to a lesser extent, reach
retailers through trade shows, mail programs, and industry associations.
Online Sourcing – To serve customers who want to reach us over the Internet,
we developed a new channel in late 2008 by making an online loan application
available on our consumer website. We intend to continue to develop and expand
our online marketing efforts and increase traffic to our consumer website through
the use of tools such as search engine optimization and paid online advertising.
At the end of 2015, we began testing an extension to our online functionality
and will continue this effort in 2016.
3.29% 